CalPERS Disclosure Case Delayed

The California Public Employees’ System (CalPERS) has asked the San Francisco Superior Court to give up jurisdiction in the $135 billion pension fund’s battle with the San Jose Mercury news and move the case to Sacramento. Judge James Robertson will hear the motion Thursday Nov. 14, thus delaying any decision on whether or not CalPERS will have to disclose the value of its $7 billion private equity portfolio indefinitely.

The motion was filed with the court on Monday by CalPERS attorneys Peter Mixon and Melanie Carver, who argued that since Sacramento is CalPERS’ primary place of business, the case should be heard in Sacramento County.

When the case does arrive before a judge, the Mercury News will be arguing for full disclosure of the value of the funds inside CalPERS’s private equity portfolio based on California’s Public Records Act. It will argue that the pension fund should disclose internal rates of return for each of the private equity funds in its portfolio so that it can evaluate how the pension fund is managing in a down market.

CalPERS, meanwhile, has argued that full disclosure of internal rates of return and interim performance data would be misleading, since interim fund performance does not predict. Not only would such disclosure inaccurately reflect the value of its investment portfolio, but such disclosure would also amount to disclosure of a trade secret, a protection guaranteed by the State’s Public Records Act. Also, CalPERS argues, releasing performance data and violating the confidentiality agreements it signed with its limited partners would make the pension fund an unattractive investment partner and effectively shut it out of future investment partnerships. That would hurt its pensioners in the long run by denying them access to some of the most lucrative investment opportunities.

Members of the private equity community have come out in favor of CalPERS. The National Venture Capital Association, for example, has filed an amicus brief on behalf of CalPERS, while a number of general partnerships have written official letters of support.

The Mercury News set groundwork for the case last September, when it asked the pension fund to detail the performance of its private equity portfolio. After months of legal wrangling and the pension fund decided against the information’s release, the Mercury News filed suit in October, just days after the University of Texas Investment Management Co. (UTIMCO) complied with a Freedom of Information Act request for similar disclosure.

Contact Carolina Braunschweig